How To Understand Trendiness in Supply Chain Management

Executive Summary

  • George Plossl’s View on the trendiness of supply chain management.
  • The difficult spot that consultants often put companies as they move from one trend to the next.


With terms like JIT, TQM, Lean, B2B marketplaces, Kanban, optimization, supply chain management is filled with trendy concepts that influence decision makers (a strangely high percentage of which are Japanese in origin for some reason).

In fact, for an area of study that is supposed to be more of a science than an art, supply chain management has been remarkably trendy.

I have previously described the fact that approaches applied to supply chain software very frequently do not have to pass any logical test. As I stated in response to a comment on demand sensing being a method to primarily fake forecast accuracy:

“One consultant I was working with stated that company XYZ was reported to have success with the approach. I had just come from that exact company, and my experience with them was they neither their executives nor their IT group knew anything about forecasting, and this multi-billion dollar company could not do the most elementary forecasting functions. Actually, very few companies can be used as models for forecasting excellence. Most companies do a horrible job of taking advantage of systems to improve their forecast.

However, if a big consulting company does something, or a big client does something, that seems to be sufficient evidence that other people should do it as well. I think the first question needs to be “does it make sense?” and secondly, “have we tested it?” The fact that a consulting company or a client did this or that really means nothing. Very few executives call in journalists into their office to report that they completely bombed on their IT implementation because they were ripped off by Accenture who lied to them about what software could do for them and this caused them to miss their quarter. This is called reporting bias, and obviously must be adjusted for.”

Illogical Supply Chain Management Trends

Observing the illogical nature of many supply chain management trends was noticed and written about decades ago by George Plossl. George Plossl was very focused on practical and often mathematical approaches managing the supply chain, and therefore many of the trends in a supply chain, most of which have failed to pay dividends must have struck him is strange as they strike me.

“Probably the greatest misconception is that the job of effective planning and control is primarily technical. The literature of the technical societies and the words of a few consultants have led many managers to believe that all they need for control are the right techniques in a system. Overselling sound and necessary techniques like MRP has certainly been a great disservice to hard-pressed managers. Interest in new techniques flares up like fads in clothing and sports. Too many managers seem to believe that they can buy their way out of trouble quickly by adopting the Japanese “Kanban” technique or the Israeli super mathematical “Optimal Production Technology.” Over-simplified solutions to complex problems, like jogging for better health and fad diets, continue to beguile many people unwilling to adopt the necessary changes in life-style so needed for achieving their real goals. Sound planning, effective execution of the plan and adequate control requires more than techniques and computer programs however elegant and expensive these may be.” – George Plossl

In this quote, George Plossl does a good job of explaining the penchant for trends that he saw in his consulting work.

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“Production and Inventory Control: Applications,” George Plossl, George Plossl Education Services, 1983

To get a good basis in supply planning, see my book on supply planning software.

Supply Planning Book


Supply Planning with MRP, DRP and APS Software

Showing the Pathway for Improvement

Supply planning software, and by extension supply planning itself, could be used much more efficiently than it currently is. Why aren’t things better?

Providing an Overall Understanding of Supply Planning in Software

Unlike most books about software, this book showcases more than one vendor. Focusing an entire book on a single software application is beneficial for those that want to use the application in question solely. However, this book is designed for people that want to understand supply planning in systems.

  • What methods fall into APS?
  • How do the different methods work and how do they differ in how they generate output?
  • What is the sequence of supply planning runs?

These types of questions are answered for readers in this book.

This book explains the primary methods that are used for supply planning, the supply planning parameters that control the planning output as well as how they relate to one another.

Who is This Book For?

This book as a practical primer for anyone looking to perform a supply planning software selection, any person beginning a supply planning project, or anyone who just wants to understand supply planning software simply better.


  • Chapter 1: Introduction
  • Chapter 2: Where Supply Planning Fits Within the Supply Chain Planning Footprint
  • Chapter 3: MRP Explained
  • Chapter 4: DRP Explained
  • Chapter 5: APS Supply Planning Methods
  • Chapter 6: APS for Deployment
  • Chapter 7: Constraint-based Planning
  • Chapter 8: Reorder Point Planning
  • Chapter 9: Planning Parameters
  • Chapter 10: How MRP, DRP, and APS Relate to One Another
  • Chapter 11: Supply Planning Visibility and Master Data Management
  • Chapter 12: Understanding the Difference Between Production Versus Simulation


How to Best Understand the Forgotten Supply Driven Supply Chain

Executive Summary

  • Demand-driven supply chains are far more promoted than the almost unheard of supply-driven supply chains.
  • To understand supply driven supply chains one must understand locked in production.
  • Supply-driven supply chains mean understanding managing contracts and understanding co-products.

Introduction to Supply Sided Supply Chains

A demand driven supply chain is considered the right approach to supply chain management. It seems so obvious. The demand driven supply chain starts at demand and everything works backward from there. Therefore the question now becomes how can a supply chain become more demand driven.

However, what is the opposite of a demand-driven supply chain? Why would anyone want this? Analyzing this question provides a better understanding of what a demand driven supply chain and what a supply driven supply chain is. And why one would want to set up a supply chain to work one way or another.

Demand Driven Supply Chain Versus Supply Driven Supply Chains

I wanted to bring up some analysis provided by this paper. This is the analysis which is often forgotten in all the talk of demand-driven supply chains.

Little has been written about supply driven chains — so little in fact that they seem to be almost forgotten and yet, as will be shown, there are a significant number of them and their behavioral characteristics and operational techniques differ from those of demand driven chains.”

A good example of a supply driven supply chain is oil production. Oil is often, in the short term at least, pulled from the ground at a constant rate. Demand does fluctuate, and much of the supply and demand matching is performed through changes in the price.

Demand side supply chains are very much focused on the benefits of supplier collaboration. However, this may not always be the case with supply side supply chains.

“For demand driven supply chains, sharing information among the partners of the chain dampens the bullwhip effect. However, for supply driven chains, secrecy is often necessary. If a supplier is having difficulty selling his entire quantity, customers can use this information to extract further price concessions.”

Examples of supply side supply chains are the following products:

  • “Alaskan Crude Oil
  • Bananas
  • Fresh Cut Flowers
  • Fishing Industry
  • Copper
  • Natural Gas
  • Corn
  • Airline Seats
  • Trucking Backhauls”

What these examples have in common is that the investments into production are fixed for some time. This means that production capacity has been set up in response to a long-term demand forecast. And changes would occur to capacity after a long-term change to the forecast. In this environment, one cannot simply become a demand driven supply chain. The supply is not simply a spigot that can be turned on and turned off. 

These are examples of “locked in production,” some of them adding a perishable quality to them. These examples are not exhaustive. They do not include the examples that I have discussed which are explained in the previous article that relates to the ability to shape demand and to substitute demand.

Locked in Supply Chain Production

If we take the examples of “locked in production,” while the production is most often considered to be due to the company owning the production assets, in fact, it can also apply to businesses that outsource production — but which are contractually obligated to purchase a certain quantity of output.

The paper explains the following scenario on organic farming from Horizon Organic (now owned by White Wave Foods).

“Unlike bananas, many other supply driven supply chains do not have vertical structures. Horizon Organic produces certified organic eggs, juice and dairy products, and sells to grocery stores. Horizon is contractually obligated to buy the full production of several 100 organic farms, giving the supply chain a supply driven nature. Horizon operates a “virtual” supply chain where the growing, processing, packaging, and shipping activities are all contracted.”

That is, locked in production occurs in companies that are both vertically integrated and those that are outsourced. Many of those that follow the Lean or flexible approach to supply planning may not like this. They may propose that companies should not sign these contracts.

Managing Contracts

That is a simple way to out of dealing with the realities of the supply chain. First, the price paid would be different without signing contracts. If we take an example from the dairy industry, a larger company — like White Wave Foods, is in a much better position to accept the variability of demand than the smaller farms. Signing these long-term contracts adds value to a process. It enables higher production by providing the farms with a guaranteed buyer. The article describes other examples of such contracts:

“Take or pay contracts are common in the electronic contract manufacturing, petroleum, and natural gas industries. If the minimum volume stipulated in the contract is significant, it can become a supply driver for the entire supply chain.”

Understanding Co-Products

Another example of locked in production is co-products. Co-products are associated with process industry manufacturing. They are the necessary output of a manufacturing process which has the original purpose of producing a primary product.

The higher margins of the primary product drive the production of the co-product. The production of the coproduct is a dependent production. The following are all co-products of certain manufacturing processes. 

  • Sulfuric acid
  • Whey protein (one pound of cheese creates 9 pounds to whey protein — once considered a co-product, whey protein has since grown into a primary product itself)
  • Carbon dioxide
  • Animal feed

However, co-products are extremely common in the process industries.

Commodities or Differentiated Products

Interestingly, this paper proposes that supply driven products are the commodity-like in that they are sold on price. However, my consulting clients show that this is not always the case. Supply-driven products can also be differentiated products.


  • This has explained some of the observations of one of the few published works on the topic of supply-driven supply chains.
  • These environments do not fit within the traditionally established view of supply chains. Therefore, they are minimized in the literature, and in fact, substantially overlooked.

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  • Interested in Our Supply Planning Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

Brightwork MRP & S&OP Explorer

Improving Your Supply Planning, MRP & S&OP Software

Brightwork Research & Analysis offers the following supply planning tuning software, which is free to use in the beginning. See by clicking the image below:


I cover concepts like this in the following book.

Replenishment Triggers Book

Replenishment Triggers

Getting the Terminology Right

The terms make to order and make to stock roll quickly off of people’s tongues regardless of their knowledge of other supply chain conditions. Many executives speak about “moving to make to order environment.” For most companies, this simply is not realistic. And many businesses that say they do make to order/configure to order/engineer to order are doing assemble to order planning.

The Universality of The Manufacturing Environment Type

These terms are specific types of manufacturing environments. They are embedded in almost all supply planning applications ranging from the most basic ERP to the most sophisticated advanced planning system. However, each manufacturing environment leads to some implications, implications that are most often not completely understood.

Getting Clear on Requirements Strategies

Requirements strategies are what control what drives the replenishment of supply in systems. In most cases, the need strategies control whether the forecast or the sales order triggers replenishment.

This book cuts down the amount of time that is required for people in companies to understand the relationship between manufacturing environments (the business) and requirements strategies (the technology setting in the supply planning application).

By reading this book you will learn:

  • What are the major manufacturing environments and what determines which manufacturing environment a company follows?
  • How do the different manufacturing environments impact how inventory is carried?
  • How are the various production environments configured in software?
  • What is mass customization, and how accurate is useful is this concept in real life?
  • What is the interaction between variant configuration and the manufacturing environment and the bill of materials?


Chapter 1: Introduction
Chapter 2: The Different Manufacturing Environments
Chapter 3: Triggering Replenishment
Chapter 4: Requirements Strategies
Chapter 5: The Make to Order Illusion
Chapter 6: The Limitations to the Concept of Mass Customization
Chapter 7: Forecast Consumption
Chapter 8: Variant Configuration in SAP ERP
Chapter 9: Conclusion

To Whom Should Supply Chain Planning Report?

Executive Summary

  • Who supply chain planning reports to versus who it should report to?
  • The current problem is time horizon orientation of supply chain planning.

Introduction to Who Supply Chain Should Report

I was recently asked where a potential newly created supply chain-planning department should report. Online you can find answers to the question of where supply chain planning departments normally report. But this does not answer the question of where the Supply Chain Planning department should report.

In the area of supply chain planning, there are truly very few companies to look up to. Companies want the benefits of supply chain planning. They want better forecasts, lower inventories, more efficient manufacturing, etc.. But they do not want to set up the necessary preconditions to obtaining these benefits.

Regarding the history of supply chain planning – there is little doubt that planning goes back since as long as there have been supply chains. In its modern incarnation, supply chain planning charts it’s growth along with the growth of computerization.

History of MRP and DRP Systems

MRP was developed in the early 1960’s but not implemented in companies in any significant number until the mid-1970’s. By the mid-1980’s ERP systems – which contained both MRP and DRP – had become popular, but these were by in large black box MRP/DRP systems. That is they did not give people the ability to aggregate and control the information in a way that was conducive to planning.

Even with the development of much more sophisticated systems, because most MRP and DRP that is run is typically run from an ERP system. This is still a problem for many companies, as this article explains.

I would propose that supply chain planning became what we think of it today in roughly the mid-1990s. This was when planning systems began to be broadly implemented. This means that modern supply chain planning is recent. Perhaps it should not be all that surprising that it has not been mastered by companies. One of the questions is how can the organization of supply chain planning be made more effective.

Who Supply Chain Planning Normally Reports To

Who an entity reports to controls its orientation and its bias. In researching this article, I was shocked to learn that some companies have their supply chain planning report into sales. This is an undeniable place you do not want supply chain planning reporting to.

  • First, a salesperson and a planner are two different ends of the spectrum.
  • A salesperson wants things in the short term, while a planner is all about the long term.

A second place that supply chain planning most often reports is to operations. There is some logic to this assignment, but it’s not optimal because operations also have a near-term orientation. So while there is some match in the knowledge-based of the two entities as both talk the language of inventory and efficiency, there is a major disconnect regarding timeline orientation. When supply chain planning reports to operations, the VP of Operations will almost never be out of planning. The VP of Operations sets the agenda for those that report to him/her.

The Common Issue of Time Horizon Orientation

Upon analyzing many planning organizations, it is clear that one of the major problems with them is that they are oriented around too short of a horizon. If you look at supply planning systems, it is quite common for supply chain planning not to have total control over the parameters.

At most companies, those in operations can go in and adjust the parameters. In some companies, salespeople also have this ability. The logic that is presented for this is that each group is trying to do something that will “meet customer demand.” Typically this is an oversimplification. One may meet one customer demand, but shorting another customer demand. Or one might meet customer demand in the short term and short a future customer.

The problem is that supply chain planning parameters are not designed to be changed interactively. They should be periodically reviewed, but not changed to meet a short-term objective.

There are ways of placing orders in the ERP system that can meet the need of simply adding more supply to the system. A major problem with making these types of changes to parameters is that after the event passes they are rarely changed back.


The problem with making supply chain planning report to any of the possible entities (sales, operations, IT, etc..) is that they all have time horizons that are shorter that supply chain planning’s time horizon. Supply chain planning cannot be effective at taking advantage of the software tools that it uses if it continually has its timelines shortened.

Planning is supposed to take the long view, and it is difficult to do this if the entity that one is reporting to does not share this as a KPI. For instance, it is quite common for VP’s of Operations to be hostile to planning – and this undermines the resources that the company has put into planning. In my view, supply chain planning should not report to any of these entities, but should instead report directly to the CEO.

Something that this would allow is for the more strategic use of supply chain planning output. Supply chain planning can run long-range simulations that will provide the analytical support that the CEO requires to manage the business better. Unfortunately, few companies leverage their supply chain planning in this way.

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  • Interested in Our Supply Planning Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.


Repairing the MRP System Book

MRP System

Repairing your MRP System

What is the State of MRP?

MRP is in a sorry state in many companies. The author routinely goes into companies where many of the important master data parameters are simply not populated. This was not supposed to be the way it is over 40 years into the introduction of MRP systems.

Getting Serious About MRP Improvement

Improving MRP means both looking to systematic ways to manage the values that MRP needs, regardless of the MRP system used. It can also suggest evaluating what system is being used for MRP and how much it is or is not enabling MRP to be efficiently used. Most consulting companies are interested in implementing MRP systems but have shown little interest in tuning MRP systems to work to meet their potential.

The Most Common Procedure for Supply and Production Planning?

While there are many alternatives to MRP, MRP, along with its outbound sister method DRP, is still the most popular method of performing supply, production planning, and deployment planning. In the experience of the author, almost every company can benefit from an MRP “tune up.” Many of the techniques that the author uses on real projects are explained in this book.


  • Chapter 1: Introduction
  • Chapter 2: The Opportunities to Improve MRP
  • Chapter 3: Where Supply Planning Fits Within the Supply Chain
  • Chapter 4: MRP Versus MRP II
  • Chapter 5: MRP Explained
  • Chapter 6: Net Requirements and Pegging in MRP
  • Chapter 7: Where MRP is Applicable
  • Chapter 8: Specific Steps for Improving MRP
  • Chapter 9: Conclusion
  • Appendix A: Calculating MRP

Software Ratings: Supply Planning

Software Ratings

Brightwork Research & Analysis offers the following free supply planning software analysis and ratings. See by clicking the image below:


How to Appreciate The Four Supply Planning Threads and Their Timing

Executive Summary

  • There are four major supply planning threads which are distinct from planning runs.
  • In this article, we explain using an MRP example. We also cover how a rough schedule or rough plan differs from a detailed schedule and S&OP, as well as the deployment plan, redeployment plan and the timing of various supply planning threads as well as the differences between the threads.


There is often a good deal of confusion as to what are the primary planning threads for supply planning. Therefore, I have spelled them out in this article.

Different threads make up the supply planning portion of the supply chain process. The supply chain process would include demand planning, supply planning, production planning, etc..

Planning Runs or Planning Threads?

These are often referred to as “planning runs.” However, this is a less accurate way of defining them.

This is because, in system terms, there are often multiple jobs or runs scheduled within each thread. For instance, one may schedule one grouping of product location combinations to be placed into one run, and then another group to be placed in a second run and so on. For instance, one may hear someone say that after the “MRP run” the results were XYZ.

However, the MRP run that is referred to may, in fact, be comprised of one MRP run for a particular product group, another MRP run for another product group and so on. But when the person is using the term, MRP run they are in fact describing all of the MRP runs.

Therefore, I use the term threads instead of the more common “run” because there can be multiple planning runs within any one thread as part of that supply chain process.

Understanding the Threads of Supply Planning

These planning threads are most typically discussed independently from one another. However, they, in fact, have an everyday basis. They are the following:

  1. S&OP & Rough Cut Capacity Plan
  2. The Network/Initial Supply Plan
  3. The Deployment Plan
  4. The Redeployment Plan

S&OP & Rough Cut Capacity Plan

These are used for long-range planning and in most cases are off-line analyses and is not part of the live environment. The term rough schedule or rough plan or rough capacity schedule is used to differentiate it from a detailed schedule. A rough plan is aggregated and will have only high-level resources information if it uses any resource information at all.

A rough plan, schedule or capacity plan is intended to allow higher-ups to gain an overview, but the rough plan, schedule or rough-cut capacity plan is only a high-level representation of what will actually occur. A rough plan or rough schedule or rough cut schedule is the starting point.

The Network/Initial Supply Plan: (performed by MRP in ERP systems)

Produces initial production and procurement plan. Is focused on bringing stock into the supply network, and in creating stock with planned production orders. Can also be called the master production schedule (MPS), if the initial supply plan is run under certain criteria. This is covered in this article.

The Deployment Plan: (performed by DRP in ERP systems)

Focused on pushing stock from locations at the beginning of the supply network to the end of the supply network.

The Redeployment Plan: (performed by specialized applications with redeployment functionality or with a custom report)

Focused on repositioning stock, which is already in the supply network to locations where it has a higher probability of consumption. More on this in this article.

Timings of the Supply Chain Process Planning Threads

The following are the general frequency of the different supply planning processes.

  1. Rough Cut Capacity Plan / S&OP Run / MPS Run / Unconstrained Capacity Run: Weekly to Monthly
  2. Initial Supply Plan: Daily to Weekly
  3. Deployment Plan: Daily to Weekly
  4. Redeployment Plan: Weekly to Quarterly

Similarities Between the Supply Chain Process Planning Threads


The Differences Between the Supply Chain Planning Threads


More Details on the Supply Planning Threads

This article will be very different from what you may have read on this topic. This is because I see S&OP, MPS, and RCCP as all different cuts or derivations of the initial supply plan (all of which also contain the forecast and at least production, but in some cases supply planning constraints).

They are also defined by their level of granularity, whether they are a rough plan or a detailed plan.

  • A series of supply planning method and method modifiers were developed over time to create the initial supply plan.
  • The MPS and RCCP are direct copies of the initial supply plan, with changes to their thread characteristics. For instance, a copy of the initial supply plan configuration may be put into a simulation version.
  • The planning time the horizon may be lengthened, and its resources made unconstrained. (This will be demonstrated in just a few paragraphs.)

The S&OP thread is not a complete copy of the initial supply plan, as extra information is required, for instance from finance. There are just a few adjustments and additions necessary to convert an initial supply plan into an S&OP plan and to fit within the supply chain process of planning.

The vast majority of supply planning applications are not designed to support S&OP within their applications natively. And the penetration of specialized S&OP applications is low. In most cases, supply planning applications support S&OP by providing extracts.

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Supply Planning Research Contact

  • Interested in Our Supply Planning Research?

    The software space is controlled by vendors, consulting firms and IT analysts who often provide self-serving and incorrect advice at the top rates.

    • We have a better track record of being correct than any of the well-known brands.
    • If this type of accuracy interests you, contact us and we will be in touch.

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:


The various supply planning threads are covered in the following books.

Capacity Planning Book

Combining Two Types of Capacity Planning

This book is called capacity management because it encompasses two areas of planning that are usually discussed independently. Short-term capacity leveling or capacity constraining, which is the movement of demand to fit within the available supply, and long-term capacity planning. This is the planning of long-term market demand to determine if the capacity should be changed.

Using Comparative Applications

In this book, both topics are covered, and they are included using multiple software applications to explain the concepts of capacity management. These are two closely related processes. However, they are often discussed separately. This book combines their explanation as well as their relationship to one another.

By reading this book you will learn:

  • How resources are modeled in capacity management systems.
  • How the structured nature of capabilities leveling and constraining differs from capacity planning.
  • How the various planning processes fit into one another, and where the gaps can be found.
  • The time horizons of the capacity management process.
  • How to improve capacity management at your company.


  • Chapter 1: Introduction
  • Chapter 2: Capacity Leveling
  • Chapter 3: Constraint Based Planning
  • Chapter 4: Resources
  • Chapter 5: Forecast Consumption, Allocation, Scheduling Direction and Timing
  • Chapter 6: Capacity Planning with S&OP and the MPS
  • Chapter 7: The Relationship Between Planning Systems and S&OP System
  • Conclusion

Sales and Operations Planning Book


Sales and Operations Planning in Software

Getting Clear on S&OP

S&OP is a commonly discussed, yet infrequently mastered area of planning. S&OP continues to be one of the most misused and overused terms in business.

S&OP is a type of long-term planning that attempts to match supply and demand and provides input to a financial plan to support the firm’s overall strategy. S&OP is in part a subcategory of consensus-based forecasting. It means driving to a consensus on what are branches within the company or entity that are often more competitive with one another than actually collaborative.

No Problem on Getting Consensus?

Obtaining this consensus is no easy task, and beyond the political aspects of S&OP, S&OP comes with its unique software challenges because it means both planning at a higher level of aggregation than other planning processes, while also exposing the specific constraints so that those constraints can be evaluated for possible alteration.

All of these issues and more are addressed in specific detail in this book. By reading this book you will learn:

  • What is the difference between S&OP and IBP, and how does this relate to the difference that is often described in the marketplace?
  • What are important features of S&OP applications and how do some standard S&OP applications differ in their design?
  • What are the implications of aggregation to S&OP application and process?
  • What are the political considerations that are required to be understood to be successful with S&OP?
  • What are the natural domains for executive adjustment versus lower level planning adjustment?


  • Chapter 1: Introduction
  • Chapter 2: The Relationship Between Planning Systems and S&OP Systems
  • Chapter 3: S&OP Versus Integrated Business Planning
  • Chapter 4: SAP IBP, ANAPLAN & SAP Cash Management
  • Chapter 5: The Impact for SAP IBP with HANA
  • Chapter 6: S&OP, Aggregation, and Forecast Hierarchies
  • Chapter 7: Challenges in S&OP Implementation
  • Chapter 8: How Misunderstanding Service Level Undermines Effective S&OP
  • Chapter 9: Conclusion